Get Cash Back From Your Home: The Great New Strategy
Updated on May 19th, 2020
I charge almost everything to my credit cards to earn cash back and points. But certain bills like rent, property taxes or homeowner association (HOA) fees either do not allow credit cards outright or it requires a large “convenience fee” to pay with your credit card since they don’t want to lose out on the 3% merchant fee (usually they charge you 5%!). This new method I describe below is a way around that limitation.
Regular Living Expenses Are Huge
Every year I spend thousands of dollars on property taxes and HOA fees. Unless you live with your parents, you are in the same boat. Obviously, we’d rather not pay these expenses in the first place, but it’s not like we really have a choice lest we want to be foreclosed upon or be kicked out of our homes.
It would be a tad sweeter to be dumping these charges onto our best cash back credit cards and earning a few hundred dollars of cash back each year. It’s a massive spend that isn’t collecting any of these lucrative points and freebies.
The problem is
Pro-Tip: The highest yielding savings account has a 0.61% APY right now at Axos Bank
- Cities and landlords either don’t accept credit card payments at all.
- Or they do, but tack on a ridiculous fees for doing so which wipes out any benefit of cash back.
But now there are other options.
The Specialized Bill Pay Service
The typical bill pay service through your bank deducts the payment out of your checking account, which doesn’t help you. What you need is a specialized bill pay service that charges to your credit card as a regular charge and NOT as a cash advance fee.
And this is exactly what I found with Plastiq. You can pay taxes, rent, whatever directly to your credit card and they send in a bill-pay check. You don’t even have to get an envelope or a stamp! Their base fee is 2.5% but you can get
$500 of 0% fee credits through this special offer referral. (Update: As of May 8th, they are no longer honoring the referral bonus)
There are additional ways to earn more credits after you have spent the first
$500 in fee-free credits. But even if you don’t have fee-free credits remaining afterwards, it can still be worth it to use the service with big sign up bonuses. Pay 2.5%, get 25% in bonus. It’s still a winning trade.
The Cash Back Sign Up Bonus Is The Real Juice
You can use the Double Cash Back Card and earn 2% on these large purchases, but that only works if you are using the fee-free credits which you can obtain from the link above, or which you earn on your own.
Consequently, the biggest cash back pay out obviously comes from new credit card sign up bonuses easily worth 20-25% depending on the card. I’ve spent almost $15,000 in the last year on charges that I would not have been able to put on credit cards otherwise. If I pay $15,000 but get $3,000 in tax free cash back, that’s better than the best return you can get on any investment. Contrast this to one of my favorite investments, Preferred Stocks, where getting 10% is pretty common, but its not risk free and you have to pay taxes on the gains.
If you have good credit, there is no limit to how many times you can sign up to a new card and then cancel within a year or two depending on your preferences for the card. Credit card companies seem unable to stop offering free money for people with responsible credit.
Sometimes the card doesn’t have anything special other than the bonus so it is best to dump them after you’ve gotten your deal. One card I signed up for offered 60,000 points for a single purchase, which I added a coffee to and then canceled at the end of the year. Really hard to beat that!
Opening new accounts dings your credit slightly, but I do at least 3-4 new cards a year and I haven’t noticed a drop. Obviously you need to pay these cards off in full each month to capture the benefit.
Pro-Tip: Create your own portfolio pies where new money and dividends are automatically reinvested into the proportion you decide with M1 Finance. They also offer a credit card that invests your cash back. Very cool.
My Latest Cash Back Scores
The latest card I signed up for offered me enough points to stay for 3 nights at the IHG hotel chain that I like, in exchange for spending $3,000 within 3 months. Getting three hotel nights just for paying my property taxes; now that’s a tax I can feel good about!
It’s the best offer I think they have ever offered on that card. I get nothing from mentioning that credit card to you, just sharing the love with others since I think it is a great deal. If you travel a lot (not now obviously!) it would be a great card to start your rent or property tax strategy on.
The value of those nights is around $700 after factoring in the annual fee that you can’t avoid for the first year (it is common that the best deals don’t let you weasel out of paying the fee the first year). But even after factoring in the annual fee, it’s one that is hard to beat. I generally don’t keep cards that have an annual fee, but this card has a free night anniversary night so I will probably add this card to the permanent collection.
Again, I get nothing from telling you about it, just sharing the good find.
If you aren’t much of a traveler, but like to eat out, or get take out then let me tell you about my favorite card that I got earlier in the year. The Savor Capital One Card offers 4% cash back on restaurants and 2% on grocery. It has a $300 sign up bonus on a $3000 spend, which is lower than usual bonuses, but I spend a lot on restaurants so I decided it was a fit for me.
Since these are expenses you have to pay anyway when you are a renter or property owner you might as well use these expenses to your advantage. Combined with the never ending flood of sign up bonuses from credit card issuers, its a prudent strategy to lowering your living expenses by a few thousand each year.
Pro-Tip: Calculate your net worth with this personal net worth calculator
Getting sign up bonuses for cards is not new but I am advocating for a way that DOES NOT increase your organic spending. You have to spend this money anyway. It never makes sense to buy a bunch of stuff just to get the sign-up bonuses.
Spending money just to save money is never a good strategy. Instead wait until your property tax bill is due and then add it to a new credit card and enjoy the rewards!
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